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Forex Flash: What to do with EUR/USD? – Westpac, UBS and Commerzbank

The bloc currency is back to the 1.3385/90 region on Monday, waiting for any news from the Eurogroup meeting, where the main topics would be the recapitalization of the banking sector and the recue package for Cyprus.

“The reaction to Draghi’s balanced comments was excessive but shows how the euro’s mid-late Jan shine has been dulled. EZ financial conditions still argue for our 1.38 1mth target but it might need to dip further first”, explained Sean Callow, Strategist at Westpac.

The Swiss bank UBS changed its outlook on the cross from bullish to neutral, as commented by Strategists G.Yu and G.Berry. “The pair is under consolidation. The strong support is at 1.3270. Resistance is at 1.3472 ahead of 1.3564”, they conclude.

In addition, Karen Jones – Head of FICC Technical Analysis at Commerzbank – suggests, “We target the 1.3270/56 zone near term, which we suspect will hold the initial test. This is the 16th Jan low and the 61.8% retracement, however there is potential for a slide back to the 1.3228 3 month support line”.

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